A Startup Charts A Path To Make Cheaper Solar Cells

Ucilia Wang
, ContributorI write about renewable energy, electric cars and water techOpinions expressed by Forbes Contributors are their own.

MIT-spinoff 1366 Technologies on Wednesday celebrated the opening of a demonstration solar factory, the success of which will be necessary for the startup to access a $150 million federal loan guarantee to build a 1-gigawatt manufacturing plant.

The Bedford, Mass., company has developed equipment it says will reduce the production time, the amount of waste and the cost of making silicon wafers. Solar cells are made with wafers and assembled into panels for installation.

1366 will spend the next 12 to 18 months debugging problems and increasing the production rate of the 25-megawatt factory. Doing so is typical for all kinds of manufacturing, not just in solar, because it takes time to make sure all of the pieces of equipment work well together and produce products without defects.

"Once we prove that everything works well and the output is sold and the customers are happy, then we will be eligible to take the government loan," said Frank van Mierlo, CEO of 1366.

The company secured the loan guarantee offer from the U.S. Department of Energy in 2011. It plans to start looking for a location for the 1-gigawatt factory soon and aims to break ground during the first half of 2014, van Mierlo said. He also plans to start raising private money for the second factory in the second half of this year since the loan guarantee, which will translate into a government loan, will cover roughly half of the cost of building and outfitting the factory.

The company's manufacturing process is so efficient that its equipment will only need about a quarter of the space of the more conventional machines, van Mierlo said. A 1-gigawatt factory will likely need about 200,000 square feet of space.

1366, founded in 2007, is scaling up its manufacturing operation at a time when the global solar market is still reeling from a protracted imbalance of supply and demand for solar panels. Over the past two years, dozens of solar panel and component makers from the U.S., Germany and elsewhere have filed for bankruptcies. Consolidation is far from over, however, as analysts predict that over 100 more companies will likely close or get bought in the next few years.

Those who are surviving so far have cut back production, laid off employees or suspended plans to build more factories. The situation has affected both major players such as Suntech Power and
First Solar as well as new comers. d First

The oversupply problem is particularly tough for startups to handle, especially if they are on the cusp of launching their technologies. They generally have more limited funds and not much time to reduce manufacturing costs and sell their products quickly if they want to compete with larger rivals these days. Twin Creeks Technologies, a startup that came up with the equipment to make ultra-thin silicon wafers, was sold for $10 million to another factory equipment maker, GT Advanced Technologies, late last year.

While the manufacturing sector is suffering, the solar construction and retail service business is thriving. Prices of solar panels have fallen quickly, accompanied by efforts to reduce other costs such as permitting.

What does this mean for 1366? There is, of course, room for new technologies that can cut costs and give solar cell and panel makers a competitive edge. The question remains whether 1366 can deliver that. It still has to work on making sure its 25-megawatt factory, which cost $6 million in private money to build, will run smoothly to reach mass production. It has to sign up more customers. Building and running a 1-gigawatt factory will be a big undertaking, and the company is at the early stage of tackling it.

The company already has lined up customers who are trying out its wafers. Two trials have produced cells that could convert 17% of the sunlight they absorb into electricity. That efficiency falls within what other silicon solar cells can do today, and the company plans to improve that figure.